BILL NUMBER: S971

SPONSOR: YOUNG
 
TITLE OF BILL:  An act to amend the tax law, in relation to the deter-
mination of sales and compensating use taxes due

 
PURPOSE:

This bill would require that any external economic indices used by the
Department of Taxation and Finance in estimating sales tax payments due
must utilize regional economic indices to reflect the wide variation of
the costs of goods and services sold throughout the state.

 
SUMMARY OF PROVISIONS:

Section 1: Amends subdivision (a) of section 1138 of the tax law by
adding a new paragraph (5) to require that whenever the Commissioner of
Taxation and Finance is determining the amount of sales tax owed, in
instances in where a required sales tax filing has not been made or
there has been an incorrect or insufficient sales tax payment, the
Commissioner must utilize a regional economic index to estimating the
              

correct tax payment to be made.

 
JUSTIFICATION:

New York State has hired hundreds of new auditors over the past several
years and unleashed them on unsuspecting taxpayers. Thousands of retail
merchants across the state have been subject to new audit tactics appar-
ently designed to generate as much revenue as possible. The most insid-
ious of these tactics is the practice of determining a merchant's sales
tax assessment based on external indices rather than the merchant's
records. Oftentimes, the external indices are not based on local stand-
ards thereby leading to drastically distorted assessments far exceeding
any reasonable estimate. One of the most common indices used by the
Department is based on an analysis of less than 100 businesses. The
Department continues to use this index, in spite of a specific note by
the study's authors that it is not statically reliable for such
purposes.

The state legislature and the executive have most recently acknowledged
the need for the state to accommodate regional differences in pricing,
wages and purchasing power through the enactment of a minimum wage law
that imposes a differing minimum wage threshold based upon regional
economic differences within the state.

This bill would expand this policy by prohibiting the Department of Tax
and Finance from using any external index that does not reflect local
economic conditions. It ensures that anytime a sales tax assessment is
imposed on a retail merchant not based on the merchant's records it will
be more equitable since the merchant's local area will be the basis of
comparison. These business owners are the backbone of the state's econo-
my and deserve to have their taxes determined in a fair manner. This
bill will restore fairness to the tax assessment process and help retail
merchants in New York live up to their legitimate tax assessments.

 
LEGISLATIVE HISTORY:

2018: S.561/A.3924 Committed to Rules
2017: S.561/A.3924 Passed Senate
2015,2016: S.3013/A.4569 Passed Senate
2014: S.2710/A.5936 Committed to Rules
2013: S.2710/A.5936 Passed Senate
2011,2012: S.4943/A.8129 Passed the Senate

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.